I was reading the other day that MS had implemented 64-bit x86 emulation for Windows on ARM. That will also have been one of the bigger sticking points for adoption.
As you say though.. the emulation is potentially very bad. And in fairness, that's probably not just because it's being implemented poorly by a bunch of dotheads, a fresh installation of Windows 10 not only supports most of the old APIs they always have (apart from the really good stuff like 'Microsoft Agent', used by BonziBuddy), it contains special compatibility patches so that buggy software like old versions of AOL Instant Messenger can still install and run.
Break compatibility with old software and force customers to seriously consider whether, if they can't run the old stuff they have an investment in, there's any reason to be running Windows at all, OR, handicap any move off x86. Hmm...
It's an interesting look, since Apple can easily go 'Right, we're moving to this new system. Update your crap or gtfo.'. And we've seen that happen before with PPC to Intel, Mac OS Classic to OSX, 32 to 64 bit (Both Mac and iPhone), and to a lesser extent, OpenGL to Metal/Metal2.
It leads to a lot more dramatic advances and advantages, but in return, you're pretty actively culling older systems.
Microsoft's support, and emulation of older systems, is no joke honestly impressive, to the point where viruses from the 16 bit era have been able to run through emulation, but if that support was cut, you'd have businesses and companies using programs from 1995 or older complaining.
Honestly, the M1's an amazing chip, simply because it shows that yes, ARM can be really, really nasty on a desktop. We're seeing $900-1500 Mac Minis thrashing $3400 16 inch MBPs, and putting up a magnificent fight against $40,000+ MacPros. We're seeing $1200 fanless MacBook Airs beating iMacs, and lasting easily over 12 hours active use. We're seeing computers that, under active use, are blowing out air that's COLDER than room temperature.
It's an interesting moment for the industry, because if a Dell or HP laptop can only achieve half of Apple's boosts, say a 1.75x boost to CPU, and a 2x boost to integrated GPU, while achieving a comfortable 12-15 hours battery life, and hitting 60 C under load, and can still run modern x86 Windows programs, that still would make for a very formidable laptop.